IAS 23 Borrowing Costs—Borrowing costs eligible for capitalisation

IAS 23 Borrowing Costs—Borrowing costs eligible for capitalisation

The International Accounting Standards Board (the Board) proposes to clarify whether an entity transfers specific borrowings to the general borrowings pool once the construction of a qualifying asset is complete.

In response to a submission to the IFRS Interpretations Committee, the Board proposed an amendment to IAS 23 to clarify the wording of paragraph 14 of IAS 23. More specifically, the proposed amendment would address how an entity calculates the capitalisation rate to be applied to expenditures it incurs on a qualifying asset that has been funded from the general borrowings of the entity. The proposed amendment would clarify that an entity includes, in the calculation of the capitalisation rate, the weighted average of all borrowing costs other than those that have been capitalised to a qualifying asset applying the requirements of paragraph 12 of IAS 23. Consequently, an entity would transfer a specific borrowing to general borrowings once the construction of that specific qualifying asset is complete.

The Exposure Draft of Annual Improvements to IFRS Standards 2015-2017 Cycle was published in January 2017. The comment period ends on 12 April 2017.